Inside the once-bustling movie theater on North Avenue, moss thrives on shattered marble walls. Broken tiles hang from the ceiling. Rainwater pours through the roof.

But this derelict structure is now seen as a future centerpiece for the growing midtown arts district. A nonprofit developer, backed financially by the Maryland Institute College of Art and a private foundation, envisions the Art Deco building as the home of film screenings, music venues, artists' studios, galleries, a playhouse and a restaurant.

The building would be the latest addition to the burgeoning Station North Arts District, which is anchored by MICA's $20 million Graduate Student Center, the old Jos. A. Bank-Morgan Millwork factory on North Avenue near Howard Street. MICA made a $50,000 loan on the projected transformation of the Centre Theater, at 10 E. North Ave.

"The loan may be unusual for MICA, but it is consistent with our commitment to the arts district," said Fred Lazarus, president of MICA.

The theater's original owner, Morris A. Mechanic, hired a Philadelphia architect to design what was tentatively called the Radio City Center, according to a 1938 Sun article. Built around the walls of an old Studebaker and Chevrolet dealership, his theater and radio studio were estimated to cost $400,000.

When the building opened in 1939, it captured the city's annual architectural prize. Named the Centre Theater, it housed a 1,000-seat film auditorium as well as WFBR-AM, where musicians played to live audiences. In the 1950s, the lobby also became a gallery where local artists such as Herman Maril and Amalie Rothschild displayed their works. "Oklahoma!" had its Baltimore film debut at what was then called the Film Centre.

After the theater closed in 1959, much of it was used as a check-processing center for Equitable Trust Co. The radio station remained into the 1990s. The building served as a church for years before landing in a bankruptcy proceeding.

Observers of the uptown neighborhood said that while the Station North area has undergone a steady transformation, change is not immediately apparent to those who do not live or work there.

"The greatest stumbling block has been the public perception that the area is not getting better," said Timothy D. Armbruster, Goldseker Foundation president, who has put more than $2 million in the Central Baltimore Partnership, a neighborhood planning initiative. "Making an additional breakthrough along the North Avenue corridor is symbolic."

Armbruster said the public sees numerous vacant buildings stretching along North Avenue at the intersection of Charles Street. "That derelict stretch continues to be an anchor dragging Station North down."

People in the neighborhood said they were aware of the landmark theater, but its shabby appearance and daunting size made it impossible to lease.

"It's such a large building it could become the cornerstone of the neghborhood," said Elliott Rauh, managing director of the Single Carrot Theatre. "It is really inspiring that all these powers joined together. It is a spectacular development."

MICA and the American Communities Trust have joined the owners of the North Avenue Market in pledging loan funds to jump-start the theater renovation. While structurally sound, the building's roof is in tatters and its dank, moldy interior reeks of mildew.

Those involved with the project worked through the Central Baltimore Partnership, which includes business, academic and community leaders.

C. William "Bill" Struever, an official of American Communities Trust and a veteran city developer, said the Centre Theater represented a "huge opportunity."

"The progress that's been made in Station North is unbelievable," said Struever, who pledged $50,000 in a loan to the redevelopment effort. "The role of arts, culture and institutions is highly important to the vitality of American cities. What Station North needed was a few more anchor uses to help drive things along."

Duff said he purchased the 67,000-square-foot property, which stretches fron North Avenue to 20th Street, for $93,000 in July at a public auction. He sought contributions, either as outright donations or loans, so he could buy and clean up the building, while abating environmental problems such as asbestos.

Those familiar with the transaction said the partnership of organizations was formed so the Centre Theatre building would not be bought by real estate speculators.

Joining the effort were Michael L. Shecter and Carolyn E. Frenkil, co-owners of the nearby North Avenue Market, a 1928 structure that they have been upgrading in the past several years.

"You are only as good as the whole neighborhood," said Frenkil. "You have to be a good neighbor, to volunteer something."